WASHINGTON, August 18 (Reuters) - Establishing a tax
domicile abroad to avoid U.S. taxes is a hot strategy in
corporate America, but many companies that have done such
"inversion" deals have failed to produce above-average returns
for investors, a Reuters analysis has found.

Looking back three decades at 52 completed transactions, the
review showed 19 of the companies have subsequently outperformed
the Standard & Poor's 500 index, while 19 have underperformed.
Another 10 have been bought by rivals, three have gone out of
business and one has reincorporated back in the United States.

Among the poorest performers in the review were oilfield
services and engineering firms, all from Texas. Among them was
the first of these companies to invert, McDermott International
Inc, which moved its tax home-base to Panama in 1983.

Drugmakers are dominating the latest wave of inversions and
most of them have outperformed the benchmark index. So far in
2014, five U.S. pharmaceutical firms have agreed to redomicile
to Ireland, Canada or the Netherlands. Deals that have not been
completed were excluded from the review.

It is impossible to know how the companies might have fared
in the market had they not inverted. Innumerable factors other
than taxes influence a stock's performance, and no two of these
deals are identical, complicating simple comparisons.

But the analysis makes one thing clear: inversions, on their
own, despite largely providing the tax savings that companies
seek, are no guarantee of superior returns for investors.

The deals basically involve a U.S. company initially forming
or buying a foreign company. Then the U.S. company shifts its
tax domicile out of the U.S. and into the foreign company's home
country. The name "inversion" comes from the idea of turning the
company upside down, making a smaller offshore unit the new head
and the larger U.S. business the body.
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